1. Field
Embodiments of the present invention relate to a method, a system, and a computer program for predicting an impact of a tax event on a user's tax liabilities at any intermediate time during a current tax year based on a comparison of known user information, predicted user information, tax event information, and tax deductions, credits, and eligibility rules for a particular deduction.
2. Related Art
Tax preparation software is currently available for use in determining a user's tax liability for the previous year by asking the user questions regarding their gross annual income, purchases, taxes paid throughout the year, and other financial actions taken by the user. Although the user may guess their total deductions and tax liability for the current tax year based on the previous year's tax return, such a method is unreliable due to possible changes in the user's income, changes in the user's purchases, changes in the user's life events, or changes in tax laws compared with the previous tax year. Accordingly, there is a need for a method, a system, and a computer program that assists the user with computing and predicting, at an intermediate time in the current tax year, the tax impact of a tax event, such as a purchase of a good or service.
In addition to the problems stemming from knowing the tax impact of the tax event at an intermediate time in the current tax year, there is no method, system, or computer program for assisting the user in determining the impact of the tax event, such as the purchase, prior to making the purchase, such as at a point of sale (“POS”). Accordingly, there is a need for a method, system, and computer program for assisting a user in determining how a particular purchase may affect their tax bill for the current year prior to or in conjunction with making the purchase.
Furthermore, as users go about their daily activities, users are generally not aware of purchases they could make or actions they could take to decrease tax liabilities or otherwise maximize tax benefits available to them. For example, a combination of factors may need to be considered to determine if a user is eligible for a particular deduction or credit, such as a user's occupation, income, age, number of dependents, location, and medical expenses. It is possible that a user may be aware of a few tax deductions available to them, but the user is seldom aware of all the combinations of factors that could affect their deduction eligibility. Thus, users may unknowingly miss opportunities to make purchases or take actions that could reduce their tax liability. In turn, users may also unknowingly make purchases or take actions that could increase their tax liability. Accordingly, there is a need for a method, system, and computer program that will educate a user on potential tax benefits or potential tax consequences of purchases or actions based on known information about the user.
There is also a need for a method, system, and computer program that prompts a user for additional information based on known information so as to determine a tax benefit or tax consequence.